Investor Stacy Chang promises made to her by Thrasio Cofounder and CEO Carlos Cashman to serve as a partner in a new venture capital firm failed to materialize after she quit her job as chief of staff at Peter Thiel’s Founders Fund.
In December, Stacy Chang touched down in New York City to kick off meetings with prospective investors for the new venture capital firm she had recently joined, Arrowside Capital. Just a few weeks before, Chang was a chief of staff at Founders Fund, the elite VC firm founded by billionaire Peter Thiel. But she’d quit that job for the chance to work as an investment partner with Carlos Cashman, cofounder and CEO of Thrasio, a buzzy consumer products startup valued at more than $5 billion.
Upon landing, Chang learned that Cashman had changed his mind about raising money from outside investors and no longer needed her services, according to a Chang lawsuit filed in San Francisco federal court. She alleges that after being dismissed by Cashman, she was left without compensation for six months of work, including carried interest in investments made during that period, and couldn’t even get reimbursed for subscriptions to office tools including Slack and Zoom. Chang is seeking damages for missed back pay, unreimbursed expenses and the unvested carried interest she says she gave up by leaving Founders Fund, a total the lawsuit pegs at more than $10 million.
Cashman did not respond to phone and email requests for comment, and Chang declined to comment through a legal representative. Founders Fund declined to comment.
Chang met Cashman through a mutual contact, Thomas Copeman, a former entrepreneur and an early backer of Thrasio. The venture three traded notes on startup opportunities through 2020 and into 2021, the lawsuit claims, until in May, Copeman informed Chang that Cashman planned to provide $10 million to serve as the anchor limited partner in a new fund led by Copeman. Chang presented to the two in June and was promised a partner role at the firm, called Arrowside Capital, that summer, according to her lawsuit. Over the next several months, she visited them in Boston for work meetings, sourced and corresponded with startups and investors from an Arrowside email, and participated as the group backed 15 startups, including three companies sourced by Chang.
But while Chang was doing much of the grunt-work of setting up a VC firm – setting up a deal flow pipeline tracker and providing weekly recaps of investment activities, attending meetings and writing notes to startups that Arrowside was passing on – she did not have a formal offer letter or written contract at this point, the lawsuits. This wasn’t a source of undue concern, Chang’s lawyers maintain, because Arrowside was not yet formally incorporated; Until it was ready to start fundraising, she wouldn’t need to leave her day job at Founders Fund. Still, Cashman approved documents for a 2022 budget for Arrowside that detailed she would receive a salary of $225,000, the lawsuit alleges. More importantly, the budget detailed the carried interest split for the firm’s investors: 40% for Copeman and 25% each for Cashman and Chang, plus 5% for another planned investor, Scott Briggs, and 5% open for future hires.
In mid-November, Changed resigned from Founders Fund with Copeman’s encouragement, she claims; she left at month’s end. Then, the day before Chang’s planned December trip to the East Coast to kick off fundraising efforts, Copeman called her to relay that Cashman wanted her to take a $25,000 pay cut, her suit claims. The next day, Copeman told her Cashman planned to move forward without raising a venture capital fund at all, it says. Soon, Copeman proposed a settlement of one month’s pay and carried interest in the three investments she had personally sourced, which Chang’s suit says she declined. A few days later on December 16, Chang spoke to Cashman directly via Zoom. Cashman allegedly apologized for Copeman’s handling of the situation and promised to compensate Chang more fairly, according to the lawsuit. But Chang’s attempts to follow up on those promises were deflected by Cashman to Copeman, the suit alleges, who never made any “genuine offer” of compensation.
Like Cashman, Copeman didn’t immediately respond to emails and a call seeking comment.
How Arrowside Capital stands today is difficult to assess. According to the lawsuit, Arrowside’s website became public on January 28, including biographies for three investors: Cashman, Copeman and a third investor, Tucker Walsh. Screenshots provided to Forbes corroborate that account. Later, much of the website’s functionality was taken down, including any mention of individuals involved with the firm. In its place was a tagline – “the arrowside of change” and a message to “stay tuned for our upcoming website launch.”
Since the suit’s filing on Tuesday, that website was updated to list Walsh as founder, managing partner and CIO. One other individual, Andrew Winton, was listed as chief operating officer. On Thursday night, after Forbes had reached out to all those ever named by the website for comment, the site was changed back to its “stay tuned” status, with no names associated.
On that site and on Arrowside’s LinkedIn profile, only Walsh is credited as a founder – not Cashman or Copeman. On his own LinkedIn and Twitter profile pages, the Boston-based Walsh, who was previously a portfolio manager at investment manager Polen Capital, calls himself only managing partner and CIO. In a January 31 article by publication Citywire Selector, a Polen spokesperson said Walsh had departed “for a family office role.” Walsh is also the named authorized person on a Form D filed with the Securities and Exchange Commission on March 7. According to that filing“ArrowSide Fund,” designated a hedge fund and not a venture capital fund, has recently raised $22.15 million.
In a written statement, Walsh said: “I am Managing Partner of Arrowside Capital LLC. The lawsuit with you mention has nothing to do Arrowside Capital LLC, no affiliation. No other comment.”
Neither Cashman nor Copeman has any mention of Arrowside on any of their public-facing biographies or profiles. In a March 14 press release for a new syndicate of e-commerce investors managed by The Fortia Group, Copeman is listed as a participant and investor at Nomadic Capital Management, his firm prior to Arrowside.
It’s possible that largesse Cashman was once counting on never materialized. While Thrasio did raise $1 billion in October as anticipated, the company’s cofounder – who had promised, according to the lawsuit, to anchor the new firm through the sale of some of his shares – may have found himself suddenly on unstable ground. That same month, CNBC reported that Thrasio had scrapped plans to go public via a special purpose acquisition vehicle, or SPAC, amid executive turnover that included Cashman’s cofounder and co-CEO Josh Silberstein and its chief financial officer. That Left Cashman, long a behind-the-scenes leader at the Amazon aggregator, with a new mission as sole CEO.
None of that will be much comfort to Chang, who, according to the lawsuit, has yet to see a dollar to pay back the office software licenses she took out for Arrowside, much less regain her footing in the venture capital. And it’s a far cry from how Cashman was allegedly thinking about his future in November, when he emailed a startup founder, according to the lawsuit: “Please meet Stacy and Tom, they run my investing brain. :)”